Annual Update Federal Register: Good News …

“Davidson” submits:

The Federal Register (FR) data is released annually mid-year for the prior year. This is one of the least noticed data releases yet remains the most important market and inflation indicator yet to be recognized. There is a significant portion of investors who seek the earliest access to data in order to trade ahead of the consensus. It is a focus that leads to active trading via computer-driven algorithms as ever more detailed and timely data comes into view. Data of this type of called “High Frequency”. The most frequent data are price trends that can emerge and disappear within days which is responsible for huge market swings as Hedge Funds jump from position to position. Data that is updated with ‘low frequency’ is ignored as not tradable. This leaves the FR data ignored when in fact it provides the most important of future economic signals leaving every other data series as secondary indicators.

The FR reflects a summary of the Federal regulatory burden on society. Mostly regulation has added costs of compliance to society and for this reason, a higher page count in the annual FR has considerable correlation with inflation and business fundamentals which market psychology translates to equity and fixed income market performances. The relationship is higher regulatory burden results in higher inflation, weaker business performance, higher unemployment and weaker equity markets. With weaker equity markets, there is an domino impact to pension plan performance adding additional burdens to business. The FR is imperfect as a guide as regulations to reduce regulatory activity also add to the annual page count. Interpretation of the FR requires taking into account the policy stance of the current administration towards regulatory policy. 

“The number of pages in the Federal Register—the daily journal of the federal government in which all newly proposed rules are published along with final rules, executive orders, and other agency notices—provides a sense of the flow of new or changed regulations issued during a given period. These regulations might increase or decrease regulatory burdens, making this an imperfect—but frequently cited—measure of regulatory burden.” 

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests ...

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